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More Arbitration News for California Employers

by Jennifer Shaw | | April 5, 2023

On June 16, 2022, we posted about the U.S. Supreme Court’s decision in Viking River Cruises, Inc. v. Moriana. There, the Court struck down the waiver in Viking’s arbitration agreement of Moriana’s right to bring a representative PAGA claim.  However, it upheld the arbitration agreement with respect to Moriana’s individual claims. Significantly, the Court ruled that if the employee’s individual PAGA claims are pursued in arbitration, the employee likely will lack standing to pursue any representative PAGA claims. Although California employers were excited about the decision, we all questioned whether it would withstand scrutiny by California courts.

Unfortunately, in several recent cases, the California Courts of Appeal rejected the standing aspect of the Court’s Viking decision. Although we are still awaiting the California Supreme Court’s ruling in Adolph v. Uber Technologies Inc., which will address the same standing issue on which the California Courts of Appeal recently ruled, it is likely the California Supreme Court will similarly determine that a plaintiff will not lose standing to pursue representative PAGA claims in court even if their individual PAGA claims are compelled to arbitration.

So, what’s a California employer to do?

  1. For the time being, employers should still include PAGA waivers in their arbitration agreements. However, they should recognize that the California Supreme Court likely will reject the standing decision in Viking. Once the Court issues the Adolph decision, arbitration agreements will need to be (again!) revised.
  2. It is more important than ever for employers to consult with experienced employment law counsel on arbitration programs. The various subtleties in the law make drafting enforceable arbitration agreements challenging at best.

Now, go enjoy the spring weather!

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